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Open AccessOpen Access JUSTC Management 30 November 2023

The impact of external search, tie strength, and absorptive capacity on new product development performance

  • School of Economics and Management, Chang’an University, Xi’an 710064, China

Cite this:
https://doi.org/10.52396/JUSTC-2022-0170
More Information
  • Author Bio:

    Huijun Yang is a Lecturer at the School of Economics and Management, Chang’an University. He received his Ph.D. degree from Xi’an Jiaotong Univisity in 2016. His research mainly focuses on innovation, leadership, and digital transformation

    Wei Wang is an Associate Professor at the School of Economics and Management, Chang’an University. She received her Ph.D. degree from Texas A&M University. Her research mainly focuses on human resources management and organizational behavior

  • Corresponding author: E-mail: wwang@chd.edu.cn
  • Received Date: 20 December 2022
  • Accepted Date: 23 March 2023
    • Available Online: 30 November 2023
    Abstract

  • Abstract

    This study examines the influences of external search breadth and depth on new product development performance from a knowledge-based view. In particular, we introduce tie strength and absorptive capacity as two contextual variables in this study. The findings from data on 281 Chinese firms indicate that search breadth facilitates new product creativity, whereas search depth facilitates development speed. Tie strength weakens the relationships between search breadth and new product creativity but strengthens the relationship between search depth and development speed. Furthermore, the synergistic effect of tie strength and absorptive capacity negatively moderates the relationship between search breadth and new product creativity but positively moderates the relationship between search depth and development speed.

    Graphical abstract

    This research demonstrates the different roles of search breadth and depth in NPD performance.

    Abstract

    This study examines the influences of external search breadth and depth on new product development performance from a knowledge-based view. In particular, we introduce tie strength and absorptive capacity as two contextual variables in this study. The findings from data on 281 Chinese firms indicate that search breadth facilitates new product creativity, whereas search depth facilitates development speed. Tie strength weakens the relationships between search breadth and new product creativity but strengthens the relationship between search depth and development speed. Furthermore, the synergistic effect of tie strength and absorptive capacity negatively moderates the relationship between search breadth and new product creativity but positively moderates the relationship between search depth and development speed.

    • Public Summary

    • Search breadth facilitates new product creativity, whereas search depth facilitates development speed.
    • Tie strength weakens the positive effects of search breadth on new product creativity but strengthens the positive effects of search depth on development speed.
    • The synergistic effect of tie strength and absorptive capacity weakens the positive effects of search breadth on new product creativity but strengthens the positive effects of search depth on development speed.

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    • References(45)
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    Maggitti P G, Smith K G, Katila R. The complex search process of invention. Research Policy, 2013, 42: 90–100. doi: 10.1016/j.respol.2012.04.020
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    Wolfgang G, Mette P, Lan S. Sustainable development strategies for product innovation and energy efficiency. Business Strategy & the Environment, 2014, 23 (2): 131–144. doi: 10.1002/bse.1777
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    Ferreras-Méndez J L, Newell S, Fernández-Mesa A, et al. Depth and breadth of external knowledge search and performance: The mediating role of absorptive capacity. Industrial Marketing Management, 2015, 47: 86–97. doi: 10.1016/j.indmarman.2015.02.038
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    Knudsen T, Levinthal D A. Two faces of search: Alternative generation and alternative evaluation. Organization Science, 2007, 18: 39–54. doi: 10.1287/orsc.1060.0216
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    Katila R, Chen E, Piezunka H. All the right moves: How entrepreneurial firms compete effectively. Strategic Entrepreneurship Journal, 2012, 6 (2): 116–132. doi: 10.1002/sej.1130
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    Wu A, Wang C C, Li S. Geographical knowledge search, internal R&D intensity, and product innovation of clustering firms in Zhejiang, China. Papers in Regional Science, 2015, 94 (3): 553–572. doi: 10.1111/pirs.12090
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    Wu J. The effects of external knowledge search and CEO tenure on product innovation: Evidence from Chinese firms. Industrial and Corporate Change, 2013, 23 (1): 65–89. doi: 10.1093/icc/dtt009
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    Laursen K, Salter A. Open for innovation: The role of openness in explaining innovation performance among U.K. manufacturing firms. Strategic Management Journal, 2006, 27 (2): 131–150. doi: 10.1002/smj.507
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    Leiponen A, Helfat C E. Innovation objectives, knowledge sources, and the benefits of breadth. Strategic Management Journal, 2010, 31 (2): 224–236. doi: 10.1002/smj.807
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    Henttonen K, Ritala P. Search far and deep: Focus of open search strategy as driver of firm’s innovation performance. International Journal of Innovation Management, 2013, 17 (3): 1340007. doi: 10.1142/s1363919613400070
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    Badir Y F, O’Connor G C. The formation of tie strength in a strategic alliance’s first new product development project: The influence of project and partners’ characteristics. Journal of Product Innovation Management, 2015, 32 (1): 154–169. doi: 10.1111/jpim.12222
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    Rothaermel F T, Alexandre M T. Ambidexterity in technology sourcing: The moderating role of absorptive capacity. Organization Science, 2009, 20 (4): 759–780. doi: 10.1287/orsc.1080.0404
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    Cuervo-Cazurra A, Rui H. Barriers to absorptive capacity in emerging market firms. Journal of World Business, 2017, 52 (6): 727–742. doi: 10.1016/j.jwb.2017.06.004
    [22]
    Ganesan S, Malter A J, Rindfleisch A. Does distance still matter? Geographic proximity and new product development. Journal of Marketing, 2005, 69 (4): 44–60. doi: 10.1509/jmkg.2005.69.4.44
    [23]
    Jansen J J P, Van Den Bosch F A J, Volberda H W. Managing potential and realized absorptive capacity: How do organizational antecedents matter? Academy of Management Journal, 2005, 48 (6): 999–1015. doi: 10.5465/amj.2005.19573106
    [24]
    Voss G B, Voss Z G. Strategic ambidexterity in small and medium-sized enterprises: Implementing exploration and exploitation in product and market domains. Organization Science, 2013, 24 (5): 1459–1477. doi: 10.1287/orsc.1120.0790
    [25]
    Kollmann T, Stöckmann C. Filling the entrepreneurial orientation–performance gap: The mediating effects of exploratory and exploitative innovations. Theory & Practice, 2014, 38 (5): 1001–1026. doi: 10.1111/j.1540-6520.2012.00530.x
    [26]
    Chiang Y H, Hung K P. Exploring open search strategies and perceived innovation performance from the perspective of interorganizational knowledge flows. R&D Management, 2010, 40 (3): 292–299. doi: 10.1111/j.1467-9310.2010.00588.x
    [27]
    Golgeci I, Ferraris A, Arslan A. European MNE subsidiaries’ embeddedness and innovation performance: Moderating role of external search depth and breadth. Journal of Business Research, 2019, 102 (9): 97–108. doi: 10.1016/j.jbusres.2019.05.011
    [28]
    Lin H-E, McDonough E F. Cognitive frames, learning mechanisms, and innovation ambidexterity. Journal Product Innovation Management, 2014, 31 (S1): 170–188. doi: 10.1111/jpim.12199
    [29]
    Shi X, Zheng Z, Zhang Q, et al. External knowledge search and firms’ incremental innovation capability: The joint moderating effect of technological proximity and network embeddedness. Management Decision, 2020, 58 (9): 2049–2072. doi: 10.1108/md-08-2019-1078
    [30]
    Tang M, Xu P, Llerena P, et al. The impact of the openness of firms’ external search strategies on exploratory innovation and exploitative innovation. Sustainability, 2019, 11 (18): 4858. doi: 10.3390/su11184858
    [31]
    Lavie D. Alliance portfolios and firm performance: A study of value creation and appropriation in the U.S. software industry. Strategic Management Journal, 2007, 28 (12): 1187–1212. doi: 10.1002/smj.637
    [32]
    Michelfelder I, Kratzer I. Why and how combining strong and weak ties within a single interorganizational R&D collaboration outperforms other collaboration structures. Product Development & Management Association, 2013, 30 (6): 1159–1177. doi: 10.1111/jpim.12052
    [33]
    Bergenholtz C. Knowledge brokering: Spanning technological and network boundaries. European Journal of Innovation Management, 2011, 14 (1): 74–92. doi: 10.1108/14601061111104706
    [34]
    Low S, Van Rossum D, Kraaijenbrink J. Strong ties as sources of new knowledge: How small firms innovate through bridging capabilities. Journal of Small Business Management, 2012, 50 (2): 239–256. doi: 10.1111/j.1540-627x.2012.00352.x
    [35]
    Enkel E, Gassmann O. Creative imitation: Exploring the case of cross-industry innovation. R&D Management, 2010, 40 (3): 256–270. doi: 10.1111/j.1467-9310.2010.00591.x
    [36]
    Huang F, Rice J. The role of absorptive capacity in facilitating “open innovation” outcomes: A study of Australian SMEs in the manufacturing sector. International Journal of Innovation Management, 2009, 13 (2): 201–220. doi: 10.1142/s1363919609002261
    [37]
    Leal-Rodríguez A, Roldan J L, Ariza-Montes J A, et al. From potential absorptive capability to innovation outcomes in project teams: The conditional mediating role of the realized absorptive capacity in a relational learning context. International Journal of Project Management, 2014, 32 (6): 894–907. doi: 10.1016/j.ijproman.2014.01.005
    [38]
    Zahra S A, George G. Absorptive capacity: A review, reconceptualization, and extension. Academy of Management Review, 2002, 27 (2): 185–203. doi: 10.5465/amr.2002.6587995
    [39]
    Fosfuri A, Tribó J A. Exploring the antecedents of potential absorptive capacity and its impact on innovation performance. Omega, 2008, 36 (2): 173–187. doi: 10.1016/j.omega.2006.06.012
    [40]
    Enkel E, Heil S. Preparing for distant collaboration: Antecedents to potential absorptive capacity in cross-industry innovation. Technovation, 2014, 34 (4): 242–260. doi: 10.1016/j.technovation.2014.01.010
    [41]
    Molina-Morales F X, Capó-Vicedo J, Martínez-Fernández M T, et al. Social capital in industrial districts: Influence of the strength of ties and density of the network on the sense of belonging to the district. Papers in Regional Science, 2013, 92 (4): 773–789. doi: 10.1111/j.1435-5957.2012.00463.x
    [42]
    Jansen J J P, Van Den Bosch F A J, Volberda H W. Exploratory innovation, exploitative innovation, and performance: Effects of organizational antecedents and environmental moderators. Management Science, 2006, 52 (11): 1661–1674. doi: 10.1287/mnsc.1060.0576
    [43]
    Dawson J F, Richter A W. Probing three-way interactions in moderated multiple regression: Development and application of a slope difference test. Journal of Applied Psychology, 2006, 91 (4): 917–926. doi: 10.1037/0021-9010.91.4.917
    [44]
    Li Q, Maggitti P G, Smith K G, et al. Top management attention to innovation: The role of search selection and intensity in new product introductions. Academy of Management Journal, 2013, 58 (3): 893–916. doi: 10.5465/amj.2010.0844
    [45]
    Obstfeld D. Social networks, the tertius iungens orientation, and involvement in innovation. Administrative Science Quarterly, 2005, 50 (1): 100–130. doi: 10.2189/asqu.2005.50.1.100
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    Figure  1.  Three-way interaction effects towards new product creativity.

    Figure  2.  Three-way interaction effects towards development speed.

    [1]
    Smith K G, Collins C J, Clark K D. Existing knowledge, knowledge creation capability, and the rate of new product introduction in high-technology firms. Academy of Management Journal, 2005, 48: 346–357. doi: 10.5465/amj.2005.16928421
    [2]
    Tether B S. Who co-operates for innovation, and why: An empirical analysis. Research Policy, 2002, 31 (6): 947–967. doi: 10.1016/s0048-7333(01)00172-x
    [3]
    Maggitti P G, Smith K G, Katila R. The complex search process of invention. Research Policy, 2013, 42: 90–100. doi: 10.1016/j.respol.2012.04.020
    [4]
    Wolfgang G, Mette P, Lan S. Sustainable development strategies for product innovation and energy efficiency. Business Strategy & the Environment, 2014, 23 (2): 131–144. doi: 10.1002/bse.1777
    [5]
    Katila R, Ahujia G. Something old, something new: A longitudinal study of search behavior and new product introduction. Academy of Management Journal, 2002, 46 (5): 1183–1194. doi: 10.2307/3069433
    [6]
    Ferreras-Méndez J L, Newell S, Fernández-Mesa A, et al. Depth and breadth of external knowledge search and performance: The mediating role of absorptive capacity. Industrial Marketing Management, 2015, 47: 86–97. doi: 10.1016/j.indmarman.2015.02.038
    [7]
    Knudsen T, Levinthal D A. Two faces of search: Alternative generation and alternative evaluation. Organization Science, 2007, 18: 39–54. doi: 10.1287/orsc.1060.0216
    [8]
    Katila R, Chen E, Piezunka H. All the right moves: How entrepreneurial firms compete effectively. Strategic Entrepreneurship Journal, 2012, 6 (2): 116–132. doi: 10.1002/sej.1130
    [9]
    Wu A, Wang C C, Li S. Geographical knowledge search, internal R&D intensity, and product innovation of clustering firms in Zhejiang, China. Papers in Regional Science, 2015, 94 (3): 553–572. doi: 10.1111/pirs.12090
    [10]
    Wu A, Wei J. Effects of geographic search on product innovation in industrial cluster firms in China. Management & Organization Review, 2013, 9 (3): 465–487. doi: 10.1111/more.12024
    [11]
    Wu J. The effects of external knowledge search and CEO tenure on product innovation: Evidence from Chinese firms. Industrial and Corporate Change, 2013, 23 (1): 65–89. doi: 10.1093/icc/dtt009
    [12]
    Laursen K, Salter A. Open for innovation: The role of openness in explaining innovation performance among U.K. manufacturing firms. Strategic Management Journal, 2006, 27 (2): 131–150. doi: 10.1002/smj.507
    [13]
    Leiponen A, Helfat C E. Innovation objectives, knowledge sources, and the benefits of breadth. Strategic Management Journal, 2010, 31 (2): 224–236. doi: 10.1002/smj.807
    [14]
    Henttonen K, Ritala P. Search far and deep: Focus of open search strategy as driver of firm’s innovation performance. International Journal of Innovation Management, 2013, 17 (3): 1340007. doi: 10.1142/s1363919613400070
    [15]
    Sarala R M, Junni P, Cooper C L, et al. A sociocultural perspective on knowledge transfer in mergers and acquisitions. Journal of Management, 2016, 42 (5): 1230–1249. doi: 10.1177/0149206314530167
    [16]
    Chirico F, Salvato C. Knowledge internalization and product development in family firms: When relational and affective factors matter. Entrepreneurship Theory and Practice, 2016, 40 (1): 201–229. doi: 10.1111/etap.12114
    [17]
    Zhang Y, Li H. Innovation search of new ventures in a technology cluster: The role of ties with service intermediaries. Strategic Management Journal, 2010, 31 (1): 88–109. doi: 10.1002/smj.806
    [18]
    Badir Y F, O’Connor G C. The formation of tie strength in a strategic alliance’s first new product development project: The influence of project and partners’ characteristics. Journal of Product Innovation Management, 2015, 32 (1): 154–169. doi: 10.1111/jpim.12222
    [19]
    Rothaermel F T, Alexandre M T. Ambidexterity in technology sourcing: The moderating role of absorptive capacity. Organization Science, 2009, 20 (4): 759–780. doi: 10.1287/orsc.1080.0404
    [20]
    Grimpe C, Sofka W. Search patterns and absorptive capacity: Low- and high-technology sectors in European countries. Research Policy, 2009, 38 (3): 495–506. doi: 10.1016/j.respol.2008.10.006
    [21]
    Cuervo-Cazurra A, Rui H. Barriers to absorptive capacity in emerging market firms. Journal of World Business, 2017, 52 (6): 727–742. doi: 10.1016/j.jwb.2017.06.004
    [22]
    Ganesan S, Malter A J, Rindfleisch A. Does distance still matter? Geographic proximity and new product development. Journal of Marketing, 2005, 69 (4): 44–60. doi: 10.1509/jmkg.2005.69.4.44
    [23]
    Jansen J J P, Van Den Bosch F A J, Volberda H W. Managing potential and realized absorptive capacity: How do organizational antecedents matter? Academy of Management Journal, 2005, 48 (6): 999–1015. doi: 10.5465/amj.2005.19573106
    [24]
    Voss G B, Voss Z G. Strategic ambidexterity in small and medium-sized enterprises: Implementing exploration and exploitation in product and market domains. Organization Science, 2013, 24 (5): 1459–1477. doi: 10.1287/orsc.1120.0790
    [25]
    Kollmann T, Stöckmann C. Filling the entrepreneurial orientation–performance gap: The mediating effects of exploratory and exploitative innovations. Theory & Practice, 2014, 38 (5): 1001–1026. doi: 10.1111/j.1540-6520.2012.00530.x
    [26]
    Chiang Y H, Hung K P. Exploring open search strategies and perceived innovation performance from the perspective of interorganizational knowledge flows. R&D Management, 2010, 40 (3): 292–299. doi: 10.1111/j.1467-9310.2010.00588.x
    [27]
    Golgeci I, Ferraris A, Arslan A. European MNE subsidiaries’ embeddedness and innovation performance: Moderating role of external search depth and breadth. Journal of Business Research, 2019, 102 (9): 97–108. doi: 10.1016/j.jbusres.2019.05.011
    [28]
    Lin H-E, McDonough E F. Cognitive frames, learning mechanisms, and innovation ambidexterity. Journal Product Innovation Management, 2014, 31 (S1): 170–188. doi: 10.1111/jpim.12199
    [29]
    Shi X, Zheng Z, Zhang Q, et al. External knowledge search and firms’ incremental innovation capability: The joint moderating effect of technological proximity and network embeddedness. Management Decision, 2020, 58 (9): 2049–2072. doi: 10.1108/md-08-2019-1078
    [30]
    Tang M, Xu P, Llerena P, et al. The impact of the openness of firms’ external search strategies on exploratory innovation and exploitative innovation. Sustainability, 2019, 11 (18): 4858. doi: 10.3390/su11184858
    [31]
    Lavie D. Alliance portfolios and firm performance: A study of value creation and appropriation in the U.S. software industry. Strategic Management Journal, 2007, 28 (12): 1187–1212. doi: 10.1002/smj.637
    [32]
    Michelfelder I, Kratzer I. Why and how combining strong and weak ties within a single interorganizational R&D collaboration outperforms other collaboration structures. Product Development & Management Association, 2013, 30 (6): 1159–1177. doi: 10.1111/jpim.12052
    [33]
    Bergenholtz C. Knowledge brokering: Spanning technological and network boundaries. European Journal of Innovation Management, 2011, 14 (1): 74–92. doi: 10.1108/14601061111104706
    [34]
    Low S, Van Rossum D, Kraaijenbrink J. Strong ties as sources of new knowledge: How small firms innovate through bridging capabilities. Journal of Small Business Management, 2012, 50 (2): 239–256. doi: 10.1111/j.1540-627x.2012.00352.x
    [35]
    Enkel E, Gassmann O. Creative imitation: Exploring the case of cross-industry innovation. R&D Management, 2010, 40 (3): 256–270. doi: 10.1111/j.1467-9310.2010.00591.x
    [36]
    Huang F, Rice J. The role of absorptive capacity in facilitating “open innovation” outcomes: A study of Australian SMEs in the manufacturing sector. International Journal of Innovation Management, 2009, 13 (2): 201–220. doi: 10.1142/s1363919609002261
    [37]
    Leal-Rodríguez A, Roldan J L, Ariza-Montes J A, et al. From potential absorptive capability to innovation outcomes in project teams: The conditional mediating role of the realized absorptive capacity in a relational learning context. International Journal of Project Management, 2014, 32 (6): 894–907. doi: 10.1016/j.ijproman.2014.01.005
    [38]
    Zahra S A, George G. Absorptive capacity: A review, reconceptualization, and extension. Academy of Management Review, 2002, 27 (2): 185–203. doi: 10.5465/amr.2002.6587995
    [39]
    Fosfuri A, Tribó J A. Exploring the antecedents of potential absorptive capacity and its impact on innovation performance. Omega, 2008, 36 (2): 173–187. doi: 10.1016/j.omega.2006.06.012
    [40]
    Enkel E, Heil S. Preparing for distant collaboration: Antecedents to potential absorptive capacity in cross-industry innovation. Technovation, 2014, 34 (4): 242–260. doi: 10.1016/j.technovation.2014.01.010
    [41]
    Molina-Morales F X, Capó-Vicedo J, Martínez-Fernández M T, et al. Social capital in industrial districts: Influence of the strength of ties and density of the network on the sense of belonging to the district. Papers in Regional Science, 2013, 92 (4): 773–789. doi: 10.1111/j.1435-5957.2012.00463.x
    [42]
    Jansen J J P, Van Den Bosch F A J, Volberda H W. Exploratory innovation, exploitative innovation, and performance: Effects of organizational antecedents and environmental moderators. Management Science, 2006, 52 (11): 1661–1674. doi: 10.1287/mnsc.1060.0576
    [43]
    Dawson J F, Richter A W. Probing three-way interactions in moderated multiple regression: Development and application of a slope difference test. Journal of Applied Psychology, 2006, 91 (4): 917–926. doi: 10.1037/0021-9010.91.4.917
    [44]
    Li Q, Maggitti P G, Smith K G, et al. Top management attention to innovation: The role of search selection and intensity in new product introductions. Academy of Management Journal, 2013, 58 (3): 893–916. doi: 10.5465/amj.2010.0844
    [45]
    Obstfeld D. Social networks, the tertius iungens orientation, and involvement in innovation. Administrative Science Quarterly, 2005, 50 (1): 100–130. doi: 10.2189/asqu.2005.50.1.100
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